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Choosing fair lotteries to defeat the competition

  • Liad Wagman

    ()

  • Vincent Conitzer

    ()

We study the following game: each agent i chooses a lottery over nonnegative numbers whose expectation is equal to his budget b_i. The agent with the highest realized outcome wins and agents only care about winning). This game is motivated by various real-world settings where agents each choose a gamble and the primary goal is to come out ahead. Such settings include patent races, stock market competitions, and R&D tournaments. We show that there is a unique symmetric equilibrium when budgets are equal. We proceed to study and solve extensions, including settings where agents must obtain a minimum outcome to win; where agents choose their budgets (at a cost); and where budgets are private information.

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File URL: http://hdl.handle.net/10.1007/s00182-011-0275-9
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Article provided by Springer in its journal International Journal of Game Theory.

Volume (Year): 41 (2012)
Issue (Month): 1 (February)
Pages: 91-129

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Handle: RePEc:spr:jogath:v:41:y:2012:i:1:p:91-129
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